FM has been trying to balance expenditure, sources of income: Pankaj Pandey

The retail head at Equity research, ICICI Securities gave a thumbs up to the Budget today, but revealed some reservations too

The much awaited Budget 2013 presented by Finance Minsiter, P Chidambaram seemed to spook the markets with both the Sensex and the Nifty losing over 1.5% each in today's trade. However, market participants like Pankaj Pandey, Head - Retail Equity Research, ICICI Securities thinks otherwise.

Pandey was of the opinion that Budget was largely on the expected lines. He gave a thumbs up to today's announcement as service tax was the priority for the FM and he has been applying pressure at the right points. On the expenditure side, FM has been trying to balance expenditure and sources of income. Hence he believes that overall, Chidambaram has done a good job at raising revenues through sales tax.

However, he adds that elements of populism were also visible but the FM managed to balance it tactically such that it does not take a toll on fiscal deficit.

Speaking on the markets, he believes that increase in excise duty will not be an overhand for auto majors like Tata Motors and Mahindra & Mahindra (M&M). The reason being for M&M, what happens on the farm side is a major mover and Government has announced some measures for the agriculture space so that nullifies the effect of this negative development.

In the case of Tata Motors, there are buses which form a major chunk of their portfolio and off late the stock ares driven by the JLR part of the story. So there is no big negative, opines Pandey.

He believes that going ahead the major trigger for the market is how GDP growth rate will pan out in the coming year. explaining which he says, currently markets are trading at 15x and now if the GDP growth rate doesn't revive or is stuck in the range of 5-6%, corporate earnings will not grow more than 12-13%.

So in that sense there could be a chance of re-rating in terms of PE multiples, he said.

Meanwhile, picking on one space to invest post Budget Pandey sticks to consumption theme as investment cycle will take some time to improve, though the measures have been taken in the right direction.